Replies to post #2421 on ARMOUR Residential REIT Inc (ARR)

[bar1080]

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[bar1080]

SA on-the-mark hatchet job on ARR. Be sure to read the many comments at the end of the write up from SA members.

Dec. 24, 2014

"ARMOUR Residential REIT (NYSE:ARR) surprised pretty much no one when it announced lower monthly dividends for Q1 2015. The company has slashed its dividend by 20% to $0.04 per month, compared to $0.05 per month for all of 2014. At current prices, ARMOUR yields 13% and trades at a 20% discount to its Q3 2014 NAV of $4.58 per share.

While I am being a tad too harsh on ARMOUR, the company has been seeing its fundamentals deteriorate. For the most recent quarter, Q3 2014, ARMOUR saw its "core income" drop to $0.13 per share, down from around $0.14 per share in Q2 2014 and $0.15 per share in Q1 2014. In other words, ARMOUR has posted falling "core income" every quarter, an unsustainable trend by pretty much any definition..."

"Conclusion
ARMOUR continues to be one of the weaker names among the mREITs. The company has sky-high leverage, above 8.4x, well above peers, who typically have leverage in the 5x-6x range. In addition, management has had a dubious track record in creating shareholder wealth, seeing NAV decline in periods where many mREITs have prospered, such as for Q1 2014. My simple suggestion is to avoid ARMOUR. There are many of other names in the sector offering similar yields with much less risk."


http://seekingalpha.com/article/2777815-armour-residential-reit-a-20-percent-dividend-cut-just-in-time-for-the-holidays